Land price escalates on news about FDI 'wave'
“Someone said the land rent in IZs has surged to $150-200 per square meter. But rent of $100 is considered high already,” said Do Nhat Hoang, director of the Foreign Investment Agency (FIA).
According to MPI’s Economic Zone Management Department, there were 561 IZs as of the end of May with total area of 201,000 hectares, accounting for 0.6 percent of total area of the country.
These include 374 established IZs with the area of 114,400 hectares (accounting for 56.9 percent of total programmed area), and 259 unestablished zones with the area of 86,600 hectares.
More and more investors have poured money into industrial real estate projects, believing that demand for land in IZs will soar in the time to come as foreign investors are flocking to Vietnam because of the US-China trade war and Covid-19.
News about the FDI wave has pushed the land rent in IZs up. Hoang from the Foreign Investment Agency (FIA) also thinks that IZ land rents have become too high.
In order to invite big foreign investors to the country, they need to prepare land resources well. However, a problem has arisen that the land fund is shrinking and land rent is increasing.
Analysts also point out that there are many problems in IZ development. While the land rent is on the rise, infrastructure conditions have not improved. Infrastructure development is going slowly and potential investors need to seek alternative solutions.
|According to Pham Ngoc Thien Thanh from CBRE Vietnam, the total supply of ready-made workshops and storehouses in the north will reach 2 million square meters by 2020, an increase of 25.3 percent over the year before.|
According to Pham Ngoc Thien Thanh from CBRE Vietnam, the total supply of ready-made workshops and storehouses in the north will reach 2 million square meters by 2020, an increase of 25.3 percent over the year before.
In the south, the total supply will be 2.7 million square meters, an increase of 28.2 percent. After the pandemic is contained, the rents to be offered may increase by 4-11 percent.
While agreeing that IZ development is a very promising business, analysts warned that not all investors will succeed.
Le Trong Hieu from CBRE Vietnam said the development of industrial real estate requires huge capital for site clearance and infrastructure development, and therefore is not a game that can be played by everyone, but just big investors.
He said that individual investors could get indirect benefits from IZ development by building houses for specialists, located next to the IZs.
Meanwhile, investors complain that complex procedures may make them miss opportunities.
“Under current laws, it will take at least two years to obtain a license to develop IZs. During the two years, many opportunities may be missed," said Nguyen The Chinh from Viglacera.
A zero-dong supermarket was opened on Saturday to support 1,500 workers of the Thang Long Industrial Zone in Hanoi who have been financially affected by the coronavirus pandemic.
Speeding up infrastructure development and improving ease of doing business and vocational training are among things Vietnam can do to make itself more attractive to foreign investors post-Covid-19, according to VinaCapital.